Sector sees further market consolidation

As of 30 June 2024, professional services organisation KPMG reported 196,848 people were accessing residential care, a 3.2 per cent increase since 30 June 2023.

The Aged Care Market Analysis 2025 report also shows occupancy is now sitting at 88 per cent. At the same time, the total number of operational places available has grown to 223,691.

This trend, KPMG noted, normally sees a higher number of unoccupied places and lower occupancy rates for providers, however an increase of 3.2 per cent in the number of people in residential care alongside a 1 per cent increase in total number of places was seen instead.

Both of these increases occurred despite a reduction in the number of providers – 663 in FY23 to 642 in FY24 – and a 12 home decrease, which KPMG noted as evidence of ongoing market consolidation.

KPMG partner in charge Evan Rawstron and director health, ageing and human services Lauren Ffrost told Australian Ageing Agenda that in the short term, the ongoing market consolidation will not impact occupancy rates, but they do expect there a big impact in the long term.

“We believe more thought should be given for how consolidation will impact providers outside of metropolitan locations. We hope to see a focus on the financial sustainability of providers operating in regional, rural and remote locations, where we know there are supply gaps. The market is reliant on smaller, community-based or culturally specific providers to deliver services in these regions, to ensure everyone who requires aged care can access it,” Mr Rawstron and Ms Ffrost told AAA.

“Gaining market share can provide large providers with the required access to capital and the resources to continue investment in refurbishments and new developments, however this can sometimes lead to small, niche or culturally specific providers unable to compete.”

However, consolidation improves financial viability and provides scale economies, making providers more resilient to funding and regulatory changes, said Mr Rawstron and Ms Ffrost.

Larger providers can also be better equipped to meet regulatory demands, they told AAA, which may improve overall care and service quality. Larger providers might also be in a position to focus on innovation in the sector.

The top 25 residential aged care providers – based on operational places – operated 44.7 per cent of total places, which KPMG said is driven by market consolidation, viability pressures, regulatory reforms and higher market activity from top providers acquiring homes or building new facilities.

The top 25 providers in order of operational places include:

• Opal – 10,565
• Bolton Clarke – 8,965
• Estia – 7,219
• Regis – 7,197
• Bupa – 6,099
• Uniting (NSW/ACT) + Wesley Mission NSW – 5,860
• Calvary – 5,717
• Arcare – 5,042
• Blue Care + Wesley Mission QLD + ARRCS – 4,867
• BaptistCare NSW & ACT – 3,058
• Catholic Healthcare – 3,039
• BlueCross – 2,852
• Aegis – 2,810
• St Vincent’s Care Services – 2,598
• Anglicare Sydney 2,530
• Mercy Health – 2,487
• Hall & Prior – 2,472
• RSL LifeCare Limited – 2,356
• OzCare – 2,265
• IRT – 2,114
• Respect Group – 2,058
• Churches of Christ Queensland – 1,974
• Thompson Health Care – 1,938
• TLC Aged Care – 1,926
• Infinite Care – 1,925

Respect Care was the only new entrant on the top 25 list.

KPMG predicts further consolidation, viewing the increasing regulatory requirements and financial viability concerns as potentially pushing smaller providers to exit the market.

Mr Rawstron and Ms Ffrost said it was interesting to find that there were six providers who improved their position in the top 25 home care providers by more than three places.

“Of these, not one is providing residential aged care, highlighting a considered and rewarded focus on the home care market,” they told AAA.

“What is surprising in this, is that of the six, three offer self-management models, which give some insight into the changing preferences of older people.”

Two of the six are franchises, they added.

Home care

There are 275,486 people accessing home care packages via 855 home care providers.

Of these providers, 454 are not-for-profits, 308 are for-profits and 93 are operated by state and local governments, according to the data gathered by KPMG.

It signals a decrease of seven not-for-profits, an increase of four for-profits and a decrease of four state and local government providers in FY24, the period covering July 2023 – June 2024.

Despite a decrease in providers, there has been an increase of 17,112 people accessing home care since FY23, which KMPG notes as being influenced by Australia’s ageing population, higher demand to age at home and the release of more packages to the market, meaning demand continues to outstrip supply.

The home care market has also seen continued acquisitions, mergers and market consolidation alongside five new market entrants:

• Maree Care, Victoria
• One Dream Community, NSW
• Hope Holistic Care, NSW
• Asayish Comfort Care, NSW
• Alpha Support at Home, SA

KPMG predicts another rise in home care providers entering the market under the new provider registration model due to more flexible, self-management options. It also predicts further market consolidation as providers look to acquire new capabilities and services.

Mr Rawstron and Ms Ffrost told AAA that they expect the new registration model will make it easier for smaller or innovative providers to enter the market to deliver less complex services, particularly in categories 1 to 3.

“This new process reduces administrative barriers and should help new providers navigate the system more easily,” they explained to AAA.

“We are seeing providers review their current service delivery models to understand where they should be playing and where they can offer the most value. We do expect to see a greater focus from existing providers on specialist and complex care.”

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